In his inaugural budget speech, Finance Minister Lawrence Wong addressed Singaporean concerns on the rising cost of inflation and supporting sectors facing difficulties. The budget aims to build new capabilities for the future and strengthen Singapore’s social system. This can be achieved by building a fairer and more resilient revenue system to support the country’s growing expenditure needs.
We have summarised 10 key items that Singapore business owners need to know.
1. SMEs To Receive Up To $10,000 As Part Of The Small Business Recovery Grant
As part of the $500 million Jobs and Business Support package, small-and-medium-sized enterprises (SMEs) affected most by COVID-19 will receive a payout of $1,000 per local employee up to a cap of $10,000 per company as part of a Small Business Recovery Grant.
Furthermore, for SMEs that do not hire local employees such as local sole proprietors and partnerships in eligible sectors and SFA licensed hawkers, market and coffeeshop stallholders will receive a one-off $1,000 grant.
2. Jobs Growth Incentive (JGI) Scheme To Be Extended Till September 2022
The jobs growth incentive scheme that encourage hiring of workers who face greater difficulties in finding jobs has been extended to September 2022 with stepped down rates.
3. Temporary Bridging Loan Programme For Businesses Has Been Extended
To alleviate businesses’ cash flow concerns from rise in cost of materials and electricity, the Temporary Bridging Loan Programme will be extended to 30 September 2022 with revised parameters.
The Enhanced Trade Loan scheme will be extended to 30 September 2022.
The enhanced Project Loans scheme was also extended to 31 March 2022 to support domestic construction projects.
4. Small And Micro Businesses Can Tap On SkillsFuture Enterprise Credit (SFEC)
The SkillsFuture Enterprise Credit (SFEC) that encourages employers to invest in enterprise transformation and capabilities of their employees covers up to 90% of qualifying expenses e.g. job redesign, training courses.
The Skills Development Levy (SDL) requirement will be waived for the qualifying period of 1 January to 31 December 2022 to benefit more small and micro businesses to utilise the SkillsFuture Enterprise Credit. The deadline to claim this credit has been extended to 30 June 2024.
5. Higher Salary Threshold For Employment Pass & S-Pass Holders
To encourage companies to access a diverse pool of manpower, the framework for both the Employment Pass (EP) and Special (S) holders will be updated from September this year.
The minimum qualifying salary for new EP applicants will increase from $4,500 to $5,000 while the minimum salaries for EP applicants in the financial services sector will be increased to $5,500.
For S Pass applicants the new minimum qualifying salary will be raised from the current $2,500 to $3,000. Whereas, for S-pass applicants in the financial services sectors, the qualifying salary will increase to $3,500.
Additionally, the Tier-1 levy for S-Pass applicants will be progressively increased from the current $330 to $650 by 2025.
6. Lower Dependency Ratio For Work Permit Holders
The work permit policies in the construction and process sectors will be adjusted.
The dependency ratio ceiling (DRC) which is the maximum permitted ratio of foreign workers to the total workforce that a company in the stipulated sector is allowed to hire, will be reduced from 1:7 to 1:5.
Moreover, the current Man-Year Entitlement (MYE) framework will also be replaced with a new levy framework to encourage firms to support more offsite work and employ more higher-skilled work permit holders.
7. Higher Carbon Tax For Businesses
To achieve Singapore’s net zero carbon ambition, the carbon tax will be raised from the current $5 per tonne to $25 per tonne in 2024 and 2025. The tax will be raised again to $45 in 2026 and 2027 with the view of reaching $50 to $80 per tonne by 2030.
The government will make announcements of subsequent increases ahead of time to provide certainty for businesses.
There will be no additional carbon tax on the use of petrol, diesel and compressed natural gas as these already have excise duties.
8. Progressive Wage Model Extended To More Sectors and Occupations
Over the next two years, the progressive wage model will be extended to the retail, food services, and waste management sectors.
The scheme will be extended to in-house cleaners, security officers, landscape workers, administrators and drivers across all sectors. Companies employing foreign workers will be required to pay all their local employees at least the Local Qualifying Salary, which is currently set at $1,400 per month.
A Progressive Wage Mark will be launched to accredit firms that pay progressive wages and local qualifying salary.
The government will require all its eligible suppliers to be accredited with the Progressive Wage Mark when they contract with it from March 2023.
9. Employers To Receive Similar Offset Package For Higher CPF Contribution Rates For Senior Workers In 2023
The CPF contribution rates for workers aged 55 to 70 will increase by another 1.5 to 2% next year and the government will provide the employers with a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contributions.
The first increase was implemented this year and the next step of increase will be in 2023.
Workers aged 55 to 70 will see a total increase of 3 to 4 percentage points in their CPF contribution rates over the next two years.
10. Higher GST Rates From 2023
The highly anticipated increase in GST-rates will be implemented incrementally from January 1, 2023. The rates will be raised to 8% first before increasing again to 9% from January 1, 2024.